Sandy Valley Showdown

San Diego  Perhaps because it started as Physicians Insurance Company of Ohio and still reports to shareholders as an insurance business, PICO Holdings of La Jolla doesn't like to answer questions about water-resources development. The firm refers inquiries to its website and to its Nevada subsidiary, Vidler Water Company. But spokesman Rich Sharpe does say that PICO, now a diversified investment company, may eventually be able to assist San Diego with its water procurement problems. And the company's chairman, Australian Ron Langley, states on the company's website, "I have been attracted to water assets as an asset class for many years. One of my first investments in North America was a water utility in the northeast.... It is obvious that there is a looming crisis in meeting water demand in the western states."

Key to PICO's strategy in entering the water-resources-development business is "reasonable and beneficial use," a concept from western water law that also figures prominently in San Diego's dispute with Imperial County over use of water from the Colorado River. Though Imperial County can claim seniority in water rights on a first-come, first-served basis, officials from San Diego, among other counties, are criticizing Imperial Valley farmers for wasting water through inefficient agricultural practices. And that hardly qualifies as beneficial use. The argument runs that the water should go to where it is needed most, the large metropolitan areas.

PICO acquired Vidler Water in 1995. In the past several months, Vidler has turned up as the bully in a David-and-Goliath showdown making headlines in the Arizona Republic, the Las Vegas Review Journal, and the Los Angeles Times. Its diminutive but combative opponent in the story has been the community of Sandy Valley, Nevada, population 2275, located on the California border 40 miles southwest of Las Vegas. Aspects of the story parallel the water dispute between San Diego and Imperial Counties.

The conflict started nearly four years ago when Vidler applied to the Nevada state engineer for permission to pump 2000 acre-feet of the water underneath Sandy Valley to nearby Primm, Nevada, on Interstate 15 leading into Las Vegas and also on the state border. ("Acre-foot" means a unit of volume equal to 325,853 gallons: one foot's depth over one acre). Primm wants the water so that it can go ahead with development plans that include a new casino.

In response to an administrative hearing deciding the matter in June of last year, both sides in the dispute have gone to district court in Las Vegas to reverse state engineer Hugh Ricci's ruling that Vidler could take 415 acre feet of water underneath Sandy Valley. On January 22, each side submitted briefs for the trial, which has yet to be scheduled, and had one additional month to reply to the brief of its opponent.

Crucial to the issue is the amount of water deemed available for the taking. Vidler vice president Steve Hartmann says only that supplies are "ample" for what his company wants to do. But Tom Buqo, the consulting hydrologist for Sandy Valley, disagrees. In the administrative hearing, according to Buqo, Vidler used results from a test drill to try "to portray that [the aquifer] they hit is part of this vast regional system. And that is simply not true. Sandy Valley is located in the upper reaches of one portion of that system. The only water that they have in Sandy Valley is derived from the mountains immediately to the east."

Buqo also says that Vidler is "erroneously" claiming that the California residents who inhabit the same basin as Sandy Valley residents "are pumping from a different aquifer. And that is not the case. The aquifers are interconnected, so that the people in Sandy Valley, Nevada, and the people on the California side use the same water as what Vidler intercepted in their well.

"The farmers on the California side of the basin," says Buqo, "are using greater quantities of water than the perennial yield, and that's why we've had a continual water-level decline in that basin. To verify it, I used the information from the U.S. Geological Survey and also from the California Water Resources Department, and both data sets show a continual decline in water levels in Sandy Valley since about 1960.

"Vidler is trying to portray things in a manner that would come out favorable to them," Buqo continues. "In so doing, they did some unusual things in their procedure. The thing that I had the most problem with is that they spent all this money to go out and drill a well, and then they didn't bother to analyze the data. As I pointed out in a protest hearing, why in the world would somebody do that unless they didn't like the answer? I analyzed the data, and I came up with the answer using accepted techniques, and I can see why Vidler wouldn't like the answer."

In its appeal of the results of the administrative hearing, Vidler is arguing that it should have access to some of the water underneath Sandy Valley that is not being used. Says Steve Hartmann, "We believe that there were a number of old permits that had essentially been abandoned in that area. Those should have been available. Under Nevada law, when you don't use that water, then those who want to put it to use should be entitled to do so. The law of the state is that the water belongs to the people of Nevada, subject to the beneficial use by individuals."

But Sandy Valley's attorney, Byron Mills, claims that the Vidler approach to acquiring unused water "would be a violation of the due process rights" of individual valley residents. "We do have a statute that says that five years of nonuse results in a forfeiture. But the state engineer has procedures he's supposed to follow. They have hearings. They're supposed to send out a one-year notice prior to any forfeiture of water rights. It's not an automatic, 'Oh, it looks like you haven't used for five years, your water's gone, we can give it to Vidler.' But that's what Vidler would like.